The politics of South African goldmines, silicosis and TB

The gold mining industry is trying to move sick miners from the Occupational Diseases in Mines and Works Act (ODMWA) to the Compensation for Occupational Injuries and Diseases Act (COIDA).

The Department of Labour will be handing over the administration of COIDA to the Rand Mutual Association (RMA). This all taking place while the RMA itself intends to demutualise.

What this means for mine workers with silicosis and TB

In an attempt to avoid the criticism, the Department of Labour outsourced the administration of benefits for the metals and engineering sector to the Rand Mutual Association (RMA), which has been administering compensation benefits for occupational disease, injury and death to the metal and engineering sector under Section 30 of the COIDA since 2015 and providing much faster settlement of claims for both workers and medical services.

This follows complaints by the National Union of Metal Workers of South Africa (NUMSA) about,

interminable delays by the Department of Labour’s Compensation Commissioner’s office in payouts of benefits to injured and killed workers and their families,

threats of legal action by private hospitals and clinics for non-payment of medical diagnostic and treatment costs,

unsatisfactory accounting to the parliament’s Portfolio Committee for Labour, and

a searing court judgement against the Compensation Commissioner personally for failing to do anything about the disaster

In its 2015 annual report, the RMA described some of the results of its work administering worker benefits under Section 30 of the COIDA, as going outside of its historic boundary fence; the mining industry for the first time.

According to the 2015 annual report, the acquisition of 515 000 metal and engineering workers resulted in an increase of 14% in its staff complement, while its annual premium income from insured employers more than doubled from R1 billion to R2.3 billion, which is not taxed due to its “mutual” status.

In the same annual report, the RMA also announced plans to “demutualise” its ownership structure. The mining companies which own it, planned to sell their shares to an unnamed major investor as a non-mutual company, said the RMA, which could fundamentally alter the business model of the RMA which goes back 122 years.

Silicosis and TB compensation

Meanwhile, silicosis and TB compensation for mineworkers developed through a different and parallel political process. Following epidemics of silicosis and TB among gold miners during the “speed-up” in the first decade of the 20th century, South Africa began regulating the industry and creating the racially discriminatory compensation system under what is now known as the Occupational Diseases in Mines and Works Act 1973, with the Medical Bureau for Occupational Diseases, and the Mine Compensation Commissioner (under the Ministry of Health).

The current class action against the gold industry on behalf of hundreds of thousands of mineworkers living with silicosis and TB is testimony to the failure of this joint industry-state system with regard to migrant African workers.

As this state system developed for silico-tuberculosis, the RMA developed insurance cover for the more limited responsibility of all other occupational diseases in mineworkers, such as skin diseases, heat stress and death, hearing loss, and poisoning caused by exposure to toxic gases and vapours.

On the strength of having established the RMA, the mines were exempted from the 1934 Workmen’s Compensation Act (the forerunner of COIDA).

Today, only two mutual associations are licensed by the Department of Labour to provide benefits in this way – the RMA and the Federated Employers Mutual Assurance Company (FEMAC), which covers building and construction.

Provincial governments are also permitted to have their own compensation system for occupational injury and disease, as long as the benefits are as good as or better than those provided for in COIDA.

“The goal of the state compensation system for injury and disease and of the licensing of mutual associations was to clip the wings of the private insurance schemes that had sprung up, and which retained 35% of premiums paid by employers as fees and paid out only 65% in compensation to injured workers or rebates to employers,” said Pete Lewis, contributor, GroundUp.

Jay Singh, Chief Executive Officer RMA, told GroundUp that one of the key reasons RMA wants to demutualise is to bring in an empowerment partner.

As a mutual association, he said, RMA ownership is limited to policyholders. Bringing in an outside empowerment partner would breach this requirement, and it therefore requires demutualisation.

Major shareholders in the RMA who would sell their stake on the success of the demutualisation, include the members of the Occupational Lung Disease Working Group (OLDWG) – African Rainbow Minerals, Anglo American, AngloGold Ashanti, Harmony Gold, Goldfields and Sibanye Gold.

The group is in discussions with government and unions on a merger of ODIMWA and COIDA in exchange for a settlement of the silicosis/TB class action. This could remove the liability for future mineworker silicosis and TB compensation from the Department of Health to the Department of Labour, through the COIDA Workers’ Compensation Fund.

This fund is not up to date with its financial auditing, therefore technically insolvent.

Instead of fixing this, the Department of Labour is outsourcing its historic responsibility to compensate injured and sick workers to the RMA. It is therefore possible that the future responsibility for silicosis and TB in mineworkers will also be handed over by the Department of Labour to the RMA, if and when the merger of ODIMWA and COIDA is completed.

By that time, it is also possible that the RMA will then likely be a private, for-profit, black-empowered company, providing the diagnostic and other services and benefit administration to sick mineworkers and their families that the Medical Bureau for Occupational Diseases and the Mines Compensation Commissioner, along with the gold industry, have historically failed to provide.

This failure has been every bit as monumental as the failure of the Department of Labour with regard to the Workers’ Compensation Fund.

What of the benefits-to-expenses ratio of the RMA

Many questions have arisen from the possible demutualisation. Firstly

what will happen to the benefits-to-expenses ratio of the RMA, which led to it winning special status under workers’ compensation legislation as early as 1934, against its for-profit competitors?

Will the RMA’s premium income be taxed at corporate rates?

Will mining companies be prepared to raise their premiums, or will workers’ benefits for silicosis/TB shrink?

So far this questions have gone unanswered.

The RMA is owned by the mining industry and its volume of work has been diminishing in the decade to 2015 as a result of fewer deaths and injuries from accidents in mining.